Is There a Need for More Shared Ownership Properties?

It seems that the UK housing market went in to hibernation five years ago, and we have had to wait a long time to see some positive trends emerging since.

According to the Halifax House Price Index house prices have risen by an average of £10,000 in the last 12 months.

However, the problem of too high house prices meaning prospective buyers or home movers can not afford the big mortgages required.

Thanks to high house prices it appears that families on low or middle incomes have been priced out of a three bedroom home in more than three quarters of England’s property market.

Shelter, the housing and homeless charity, has warned that up to 1.8 million households with two earners bringing in between £20,000 and £40,000 a year could find themselves stuck on the lowest rungs of the property ladder or face years renting, as they would not be able to cover the monthly mortgage repayments on a family sized home.

This means that the only option for many will be years spent bringing up children in private lets, paying out dead money in rent and facing the insecurity of short term tenancy contracts of just six or twelve months.

According to analysis, one in four families on low or middle incomes will be privately renting by 2020, with many more likely to be trapped on the first rung of the ladder in homes that are too small for them as they are unable to upsize.

Most families will have to turn to the private rental sector as there is a short supply of social housing, fewer than 50,000 family sized social homes became available the last year compared to 1.8 million households already on the waiting list.

Although all is not lost, recent research has found that 95 per cent of families on low or middle incomes could afford mortgage repayments for a home where ownership was shared.

Therefore some experts are now calling for a major new house building programme.

Kay Boycott, director of campaigns and policy at Shelter, the housing and homeless charity, says “the reality is that soaring house prices mean that the traditional market is no longer working for ordinary people.”

Data has revealed that an investment of around £12 billion could potentially build 600,000 new shared ownership homes and this would then be enough to give almost half of England’s private renting families the chance to own part of their own home.

Shared ownership is a way of getting a foot on the property ladder for people who are not in a position financially to buy a property outright.

The properties are owned by housing associations, which are funded by the Homes & Communities Agency and subject to satisfying the association’s criteria they will then sell the would be buyer a percentage interest in the property for a proportionate part of the total value.